Correlation Between Mitsui Chemicals and EIDESVIK OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals and EIDESVIK OFFSHORE at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mitsui Chemicals and EIDESVIK OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and EIDESVIK OFFSHORE NK, you can compare the effects of market volatilities on Mitsui Chemicals and EIDESVIK OFFSHORE and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mitsui Chemicals with a short position of EIDESVIK OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and EIDESVIK OFFSHORE.
Diversification Opportunities for Mitsui Chemicals and EIDESVIK OFFSHORE
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mitsui and EIDESVIK is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and EIDESVIK OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EIDESVIK OFFSHORE and Mitsui Chemicals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mitsui Chemicals are associated (or correlated) with EIDESVIK OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EIDESVIK OFFSHORE has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and EIDESVIK OFFSHORE go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and EIDESVIK OFFSHORE
Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 1.73 times more return on investment than EIDESVIK OFFSHORE. However, Mitsui Chemicals is 1.73 times more volatile than EIDESVIK OFFSHORE NK. It trades about 0.07 of its potential returns per unit of risk. EIDESVIK OFFSHORE NK is currently generating about -0.08 per unit of risk. If you would invest 2,100 in Mitsui Chemicals on September 1, 2024 and sell it today you would earn a total of 60.00 from holding Mitsui Chemicals or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsui Chemicals vs. EIDESVIK OFFSHORE NK
Performance |
| Timeline |
| Mitsui Chemicals |
| EIDESVIK OFFSHORE |
Mitsui Chemicals and EIDESVIK OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and EIDESVIK OFFSHORE
The main advantage of trading using opposite Mitsui Chemicals and EIDESVIK OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals position performs unexpectedly, EIDESVIK OFFSHORE can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in EIDESVIK OFFSHORE will offset losses from the drop in EIDESVIK OFFSHORE's long position.| Mitsui Chemicals vs. SIVERS SEMICONDUCTORS AB | Mitsui Chemicals vs. Darden Restaurants | Mitsui Chemicals vs. Reliance Steel Aluminum | Mitsui Chemicals vs. Q2M Managementberatung AG |
| EIDESVIK OFFSHORE vs. LGI Homes | EIDESVIK OFFSHORE vs. UMC Electronics Co | EIDESVIK OFFSHORE vs. Richardson Electronics | EIDESVIK OFFSHORE vs. Aedas Homes SA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.
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